As a user, I’ll never use 3rd party App Store on iOS. I wish macOS app were also distributed only on App Store.
Penalized, no, scrutinized, yes, absolutely. That's the crux of the existence of antitrust.
Thing is apple are not only selling you the phone. They are selling the whole package. Everybody goes into buying an iPhone knowing exactly what they get same for developers. This hasn't changed since the iPhone began so they aren't abusing their position. They never increased their cut even though their base has grown. People only want a piece of the pie now because that pie has become huge, no other way to explain it.
Here's my thinking.
App Store profits is derived from two areas. The cost of running the App Store (which doesn't change, because the number of developers is assumed to be fairly constant), and the revenue from games and IAPs (which is variable in nature). We also know that about 85% of developers pay next to no money (in that their revenue has a negligible impact on App Store numbers, which is why Apple is willing to reduce their cut from 30% to 15%).
As such, reducing the App Store cut to 15% for everyone would result in gross margins decreasing by way more than 15%, because your costs don't change.
Apple's App Store revenue was estimated to be about $64 billion in 2020. This is close enough to Neil Cybart's own estimates, so we will roll with that. He also estimates that the App Store has around 40% gross margins. This is because Apple has margins of about 65% for services. This includes the money from Google (which is basically pure profit), and more lucrative ones like iCloud and AppleCare. So App Store margins would be lower to balance out.
Also,
Apple's App Store had gross sales around $64 billion last year and it's growing strongly again
The money that Apple makes from its App Store has become a flash point for critics of Apple that argue it has too much power.www.cnbc.com
I am not sure how many iOS developers there are. Let's go out on a limb and assume about 10 million of them actively develop for iOS. That's $1 billion a year, basically a rounding error here.
At 30%, Apple's own cut is about $19 billion (or 20 billion with developer fees). If we reduce it to 15%, Apple's cut gets reduced to about $10 billion, a 50% reduction. Assume 40% margins, Apple's costs are 11-12 billion, while their profits are about 7-7.6 billion.
So you can see that if Apple were to reduce their App Store cut to 15%, my estimates show that the App Store would effectively be run at a loss, which in turn means that Apple would be effectively subsidising it using profits from elsewhere. To break even, we take (12/64*100%) which gives us 18.75%.
TL;DR - 20% is the break-even point for the iOS App Store to be self-sustaining.
You see what would happen if developers were able to bypass iTunes and use their own payment system. Apple's earnings from the App Store would basically evaporate, and the money from developers don't even come close to covering the $11-12 billion necessary for operating costs, unless you tell me there are more than 100 million developers on iOS. The other option is to get each developer to pay $1000 a year, but this would massively disadvantage the smaller indie developers. Larger companies like Hey can easily take the hit, which is why they are the ones who ought to be paying that 30% of earnings to Apple (which gets reduced to 15% from the second year onwards).
It's not about equality, but equity. The App Store helps put every developer on an even playing field, which you lose the moment the App Store is opened up.
Can you point to any business in the world where the largest of the large customers of a company don’t get special treatment in the form of rates, or other characteristics? I’ll wait while you dig out an (meaningful) example.
Nothing in life is binary. It's a level playing field. And in the future if a company bigger than Amazon approaches Apple, they too will get special consideration.
You don't have to justify Apples revenue. They make their money legally. Now of course the government could step and limit the fees on the sales of digital goods, similar to limits on loan rates, but they couldn't do that just for Apple. That would be overturned in a hot second. And if the government did that and enacted legislation related to distribution of electronic goods, it would have a wide-sweeping affect on all companies that provide these types of digital services.
Assuming said app will still be available in the App Store. What’s stopping Facebook from pulling WhatsApp from the App Store and making it accessible only from their own third party store?If Apple offers all of these wonderful benefits there is no problem, and no need to force people to use it.
Open it up to Apps from other sources. People will still choose the app store because of all of the benefits right?
I am also wondering if you would like to provide any numbers of your own as a counterpoint?
I was responding to your hypothetical scenario where the App Store was opened up, meaning users would be able to sideload apps or visit other apps stores.
Because the benefits are to the consumers, not necessarily to the developers. And most of all not for Facebook or Epic.
On the other hand. Nobody is forcing anybody use anything or purchase an iphone. Or if you purchase an iphone you can jailbreak it an install what you want.If Apple offers all of these wonderful benefits there is no problem, and no need to force people to use it.
Open it up to Apps from other sources. People will still choose the app store because of all of the benefits right?
No, the largest customers should be able to get deals and you declined to answer my question above about it inside just downvoted it, which only goes to prove that is reality in business.
